Correlation Between COAST ENTERTAINMENT and Red Hill

Can any of the company-specific risk be diversified away by investing in both COAST ENTERTAINMENT and Red Hill at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining COAST ENTERTAINMENT and Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COAST ENTERTAINMENT HOLDINGS and Red Hill Iron, you can compare the effects of market volatilities on COAST ENTERTAINMENT and Red Hill and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in COAST ENTERTAINMENT with a short position of Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of COAST ENTERTAINMENT and Red Hill.

Diversification Opportunities for COAST ENTERTAINMENT and Red Hill

0.31

Correlation Coefficient

COAST ENTERTAINMENT  Red Hill

Weak diversification

The 3 months correlation between COAST and Red is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding COAST ENTERTAINMENT HOLDINGS and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron and COAST ENTERTAINMENT is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on COAST ENTERTAINMENT HOLDINGS are associated (or correlated) with Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of COAST ENTERTAINMENT i.e., COAST ENTERTAINMENT and Red Hill go up and down completely randomly.

Pair Corralation between COAST ENTERTAINMENT and Red Hill

Assuming the 90 days trading horizon COAST ENTERTAINMENT HOLDINGS is expected to generate 1.19 times more return on investment than Red Hill. However, COAST ENTERTAINMENT is 1.19 times more volatile than Red Hill Iron. It trades about 0.1 of its potential returns per unit of risk. Red Hill Iron is currently generating about 0.09 per unit of risk. If you would invest  45.00  in COAST ENTERTAINMENT HOLDINGS on October 6, 2024 and sell it today you would earn a total of  4.00  from holding COAST ENTERTAINMENT HOLDINGS or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

COAST ENTERTAINMENT HOLDINGS  vs.  Red Hill Iron

COAST ENTERTAINMENT

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COAST ENTERTAINMENT HOLDINGS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, COAST ENTERTAINMENT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Red Hill Iron

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Red Hill Iron are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Red Hill unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COAST ENTERTAINMENT and Red Hill

The main advantage of trading using opposite COAST ENTERTAINMENT and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COAST ENTERTAINMENT position performs unexpectedly, Red Hill can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Red Hill will offset losses from the drop in Red Hill's long position.

The idea behind COAST ENTERTAINMENT HOLDINGS and Red Hill Iron pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.